• Fri, Jan 25 2013

Words You Should Know: Social Security Payroll Tax

content_bookkeeping_320x212Does it feel like your paycheck just got a little smaller? That’s because it did, by 2%.

Thank the Social Security payroll tax.

The Social Security payroll tax is one of the lines on your pay statement, and it is what it sounds like—a 12.4% tax on wages that is used to fund Social Security. Employers pay half of that 12.4%, and workers pay the other half.

Two years ago, Congress passed a temporary tax break to give the economy a kick, reducing the employee tax to 4.2%. But that deal expired on Jan. 1.

A 2% change might not sound like a lot, but if you earn $50,000 it comes to $1,000 a year—about the size of the average American mortgage payment, says LendingTree.

To finish reading this post, head on over to DailyWorth.
To finish reading this post, head on over to DailyWorth.

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